Stocks Move Modestly Lower Following Recent Strength - U.S. Commentary

(RTTNews) - Stocks have moved modestly lower in early trading on Monday, giving back some ground after trending higher in recent sessions. The major averages have dipped below the unchanged line, although selling pressure has remained subdued.

Currently, the major averages are just off their lows for the young session. The Dow is down 40.48 points or 0.2 percent at 17,561.82, the Nasdaq is down 5.84 points or 0.1 percent at 4,789.81 and the S&P 500 is down 5.48 points or 0.3 percent at 2,044.10.

The modest weakness on Wall Street is partly due to profit taking, with traders cashing in on the recent strength in the markets.

The major averages have closed higher for five consecutive weeks and ended last Friday's trading at their best closing levels in well over two months.

Trading activity has remained somewhat subdued, however, as some traders are away from their desks ahead of the Easter holiday.

The economic calendar for this week is also relatively quiet compared to the slew of data that was released last week along with the Federal Reserve announcement.

Nonetheless, the National Association of Realtors released a report this morning showing a much steeper than expected pulling back in existing home sales in February.

NAR said existing home sales tumbled 7.1 percent to an annual rate of 5.08 million in February from 5.47 million in January. Economists had expected sales to show a more modest decrease to a rate of 5.31 million.

Reports on weekly jobless claims, new home sales and durable goods orders are also scheduled to be released in the coming days.

Energy stocks have shown a notable move to the downside in early trading, with the weakness partly due to a modest drop by the price of crude oil.

Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index has tumbled by 2 percent, the Philadelphia Oil Service Index is down by 1.5 percent and the NYSE Arca Oil & Gas Index is down by 1.3 percent.

Steel, railroad, and trucking stocks are also seeing early weakness, while considerable strength has emerged among biotechnology stocks.

Among individual stocks, shares of Affymetrix (AFFX) have come under pressure after the gene testing company rejected a $1.5 billion takeover offer from Origin Technologies. Affymetrix claimed its bid from Thermo Fisher (TMO) remains the superior proposal.

Biotechnology company BioMarin (BMRN) has also moved to the downside after revealing that a trial of its treatment for the rare disease phenylketonuria met its primary endpoint but fell short on its secondary endpoints.

On the other hand, shares of Valspar (VAL) have spiked sharply higher after the paint company agreed to be acquired by rival Sherwin-Williams (SWH) for $9.3 billion in cash.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index jumped by 2.2 percent, while Australia's All Ordinaries Index fell by 0.3 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the French CAC 40 Index has fallen by 0.9 percent, the German DAX Index is down by 0.5 percent and the U.K.'s FTSE 100 Index is down by 0.3 percent.

In the bond market, treasuries are giving back ground after trending higher over the past few sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.6 basis points at 1.907 percent.